Singapore bank suspends London property mortgages

In a statement, the bank said, “We will temporarily stop receiving foreign property loan applications for London properties. As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”

The fall in the value of the pound since the referendum outcome was known has resulted in a surge of increase in London property among foreign buyers, according to the National Association of Estate Agents.

Singapore’s biggest lender, DBS, is continuing to provide financing, but is advising its customers to be cautious. “For customers interested in buying properties in London, we would advise them to assess the situation carefully,” Tok Geok Peng, DBS executive director of secured lending, told the BBC.

“With foreign exchange risks, even if the value of the overseas property rises, any gains will be eroded if the country’s currency depreciates against the Singapore dollar.”

The Singapore dollar has gained about 10 per cent against sterling since the referendum and, according to Knight Frank, Singaporeans were the top Asian buyers of UK commercial property last year.

Karishma Vaswani, the BBC’s Asia business correspondent, commented, “Read this as the bank telling Singapore borrowers: ‘Hold your horses, chaps – you may be in for a bumpy ride’.

“Market sources tell me that UOB has the highest exposure amongst the big three banks in Singapore to London property loans. UOB doesn’t disclose how much it lends out for the London portfolio but it also offers international loans for Australia and Thailand.”